Life Insurance Industry Investments: The Search for Yield Runs Dry
Conning—Life Insurance Industry Continues Investment Struggle against Unrelentingly Low Interest Rates
(Hartford, CT) November 9, 2015—The life insurance industry’s investment decisions continued to focus on yield in 2014 and into 2015, according to a new study by Conning.
“The quest for yield has been the key focus for the life industry investment portfolio for years now,” said Mary Pat Campbell, Vice President, Insurance Research at Conning, Inc. “In response to the continued pressures of the low interest rate environment, insurers have been adjusting allocations in the investment portfolio to provide the much-needed extra yield. From 2010 to 2014, insurers have shifted away from stocks to reduce exposure to volatility, and have increased their allocation in yield-boosting investments such as Schedule BA assets as well as lower-rated bonds.”
The Conning study, “Life Insurance Industry Investments: The Search for Yield Runs Dry” analyzes life industry investments for the period 2010-2014 for the industry as a whole, by insurer size, and for five peer groups. The study combines a discussion of strategic issues facing the life insurance industry with a detailed examination of its investment profile.
“This quest for extra yield has cut across the life industry, as insurers of all sizes have been adding credit risk in their investment grade bond portfolios,” said Steve Webersen, Head of Insurance Research at Conning, Inc. “This is especially true of midsized insurers that are invested overwhelmingly in bonds. In comparing investment results between insurers, we also see some of the largest insurers adding risk with below investment grade bonds and investments in Schedule BA assets. Insurers have done what they can, but the persistent low interest rates have dominated over moves to increase yield in these past several years.”
“Life Insurance Industry Investments: The Search for Yield Runs Dry” is available for purchase from Conning by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.
Conning (www.conning.com) is a leading investment management company for the global insurance industry, with $93 billion in assets under management as of September 30, 2015, through Conning, Inc., Conning Asset Management Limited, Cathay Conning Asset Management Limited, Goodwin Capital Advisers, Inc., and Conning Investment Products, Inc. that are all direct or indirect subsidiaries of Conning Holdings Limited (“Conning”) which is one of the family of companies owned by Cathay Financial Holding Co., Ltd., a Taiwan-based company. The company's unique combination of asset management, risk and capital management solutions and insurance research helps clients achieve their financial goals through customized business and investment strategies. Founded in 1912, Conning provides clients with innovative solutions, leveraging its global capabilities, investment experience, proprietary research and risk management technology. Headquartered in Hartford, Connecticut, Conning also delivers its services globally through its offices in New York, London, Cologne, Hong Kong, and Tokyo.